A delay in your mortgage application, whether it’s for a residential mortgage or a buy to let, is often down to one of 10 common delays.
Our job as a mortgage broker is to smooth the process from beginning to end but for many clients, they don’t know what can cause a delay. Therefore, here are 10 common mortgage delays and how to avoid them.
1. Incorrect Address Details
It goes without saying that lenders will be checking your Equifax or Experian credit score as a minimum, therefore make sure you have updated all and any credit providers with the correct and current residential address. If there are any inconsistencies lenders will ask why and that will delay the process.
A good tip is to make sure you have registered the correct address on the electoral roll.
2. Identification Documents
As part of anti-money laundering and know your customer checks, we require you to prove your identity and address.
Make sure both passport and driving licence are in date, with the correct address details, as brokers and lenders can refuse to proceed if the documents aren’t in order.
3. Bank Statements
Many applications will need to see at least three full month bank statements showing your name and address.
Don’t make any edits to the statements, just send them as you receive them, whether that’s a copy from a postal statement or via download from an online account.
4. Application Forms
Always complete forms electronically and not with a pen. This ensures 100% accuracy and doesn’t leave any handwriting to be mistaken for another letter or number. Make sure you save a copy as well before sending across.
5. Proof of income
This is where mortgage applications can become complicated.
If you receive PAYE salary, then typically 3 months of pay slips which match the amount that is shown on your bank statements will suffice for a residential mortgage.
If you are self-employed, then we would need the latest 2 years of SA302s.
if your accountant prepares them, we will need the tax calculations.
Tax overviews are often missed; this is a very important document for lenders showing you paid tax on your earned income. You can get them from your accountant or HMRC Gateway
If your salary comes from a company where you won more than 24% of shares you will need to provide Sa302s and tax overviews with most lenders.
If your income is mostly commission based, you’re a key worker, or a member of the armed forces, we specialise in these mortgage applications and we will advise on what documents you need to supply.
The important aspect is to make sure all documents are clearly labelled, are in date, and contain the correct information lenders require.
6. Your Deposit
Whether this is for a residential or buy to let mortgage, lenders will need to see where the money came from.
If you have saved for a deposit the lender needs to see the bank statements, usually from a savings account, and the money leaving your current account into your savings account.
If you have transferred money from a saving account into your LTD company account, you must provide both bank statements which show the funds leaving one account and the LTD company receiving the funds.
The same applies for intercompany loans, the trading company statements need to show the money leaving and your LTD bank receiving said fund.
7. Gifted Deposits
This is where things can get a little tricky for residential, often first-time buyer, mortgages.
A gifted deposit is money given to you, usually by a parent or relative, to help you buy a property. Most importantly, this money is given with no expectation of repayment (hence “gifted”).
This is where the distinction between a gifted deposit and a loan becomes important. If the money is expected to be repaid later, then your lender may treat it as a loan. That can impact your affordability calculations and your lender’s ability to offer you a mortgage.
Lenders care about this distinction as they need to assess your financial situation and ability to repay your mortgage. Taking on a loan, even informally to a family member, may impact their assessment.
We have a whole guide on gifted deposits which is essential reading if you’re in this situation. As your broker, we will advise you through the process.
8. Property Certificates like EPC
Lenders may require surveys and certificates to verify the house valuation and price being paid. This includes a valid EPC and is particularly important for buy to let landlords ahead of new regulation changes as part of the Renters Rights Act.
9. Taking out new credit
Lenders run affordability checks based on your monthly outgoings, which includes any credit such as loans, credit cards and so on.
Delays can occur when clients take out a new credit card, or loan, which then requires the lender to run a new affordability check.
It’s best to try and delay any new purchases until the house buying process is complete, but if this is unavoidable always speak to your broker so they can best advise.
10. Applying to the wrong lender
Each lender has different criteria when it comes to residential and buy to let mortgages.
High street lenders can decline applications where other lenders won’t. Declined mortgages do leave a mark on the credit file, which other lenders can see, even if it’s not affordability related.
Using a mortgage broker, like MFB who has whole-of-market access, ensures they find approach the right lender based on your circumstances.
We offer a no-obligation consultation, so if you have any questions please contact us and one of our expert brokers will be in touch.
Next Steps
To see how we can help with your mortgage, call 0345 345 6788 or submit an enquiry here.
You can also use our free How Much Can I Borrow Calculator to determine your potential mortgage payments.
